[St. Louis Fed President James Bullard] notes Keynes’ axiom that governments should borrow to stimulate demand when the private sector falters is being proved false by the way markets are reacting to ballooning deficit spending in Europe.
The [lesson of the] European crisis is “you do not want your country to be reliant on international financial markets to a large degree.”
via Keynes vs. Hayek? Bullard Knows Which One Floats His Boat – Real Time Economics – WSJ.
Is that not what everyone should have learnt from 2008-09…
is that what everyone learnt from the 1920’s
Keynes’axiom ignores a fundamental truth.
When government borrows to stimulate growth they spend most of the money on non-growth projects and the rest on a bureaucracy to manage the projects.
Governments are not capable of developing growth projects since their core interest is in the retention of power. The private sector’s core interest is growth. CeeBee
Good point. I totally agree with what you said. So what do you think if a combination of fiscal & monetary policy will help the economy. No question that debt had gone through the roof. Then each country will have to look at what is their primary source of revenue of the country concern. It appears that the majority will be tourism. Then set the target market with the government assistance on the promotion. Well, it won’t be easy. There will be a lot to be put in place, people have to be self sustained, reduce wages, monitoring inflation, incentive fiscal policy. People need to educated. Riot does not do any better.